New Oracle Trade Idea After OpenAI Failure Report
As a bad update for the AI startup drags on other names, Oracle appears to present a lucrative trade opportunity.
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The Wall Street Journal has reported on Tuesday morning that AI-focused startup OpenAI recently failed to meet targets for both sales and new users.
This has raised concerns on Wall Street in regard to the firm's and industry spending habits as this week's high-tech earnings releases approach. Apparently, OpenAI fell short of several monthly targets for sales so far in 2026, which is only finishing its fourth month.
Some of this may be due to increased competition. Alphabet's (GOOGL) Gemini AI model is clearly better and more user friendly than it used to be. Anthropic's Claude AI model has emerged as a real player in the field as well. I realized a while ago that, in order to remain relevant, I would have to master the use of artificial intelligence and have been using it on a regular basis for quite some time.
So, I speak as someone who uses one or another of these AI models many times a day and has almost completely replaced traditional search engines with modern AI chatbots. I can say that I use Claude the most often by far, and I use Gemini often enough. I cross reference them against each other for verification as well as across Microsoft's (MSFT) Copilot model.
I don't even think about using OpenAI's ChatGPT model. I had not realized that until I sat down to write this article, but I don't use ChatGPT at all and I rely on artificial intelligence as an assistant all day long.
The Impact
The shares of stocks well known for their affiliations and business partnerships with OpenAI are under pressure on Tuesday morning. This would include Softbank Group (SFTBY) , Oracle (ORCL) , Advanced Micro Devices (AMD) , Nvidia (NVDA) and CoreWeave (CRWV) , among others.
Softbank was down a rough 11% in Japanese trade, while Oracle was trading more than 6% lower ahead of the opening bell in the U.S. Those losses have abated somewhat as I have worked on this piece.
Readers May Recall...
Shares of Oracle rallied in mid-April as Bloom Energy (BE) announced a newly expanded partnership with the tech giant that would support the rapid buildout of that firm's own AI-focused, cloud-computing infrastructure.
Under that agreement, Oracle would procure up to 2.8 gigawatts (GW) fuel cell systems for Bloom. An initial 1.2 GW of capacity has already been contracted, with deployment already underway. The deal would now continue into 2027, supporting Oracle projects across the U.S. and helping Oracle meet demand for its AI/cloud infrastructure business.
News had also broken earlier that Oracle had committed between $14 billion to $16 billion in project and debt financing to build out a large facility in Saline Township, Michigan. That facility would be used to support OpenAI and Microsoft (MSFT) AI-centric workloads.
Hmm, there's OpenAI again.
The Chart
This chart, which is an updated version of one that I showed readers earlier this month, displays the downward sloping trend, illustrated by a Raff Regression model, that had taken ORCL shares dramatically lower since September.
As the shares neared the mid $130s, support developed and the stock found flat support, as it continued to make lower highs. This evolved into a descending-triangle pattern of bearish continuance. However, the stock broke to the upside from that negative pattern on the AI news. Does that little burst of optimism need to be priced out now?
Looking at the indicators, relative strength had spiked but is now cooling off. The daily MACD, which had taken on a more bullish posture, is no longer looking quite so robust either. The stock is currently engaged in a fight to hold onto its 21-day EMA with the 50-day SMA down around $155. The 21-day line is a swing-traders battle. Come close to that $155 level and portfolio managers will get more involved, either to defend that line, or reduce exposure.
As I mentioned earlier in April:
"I do not know that I will be able to take down any equity at or close to $150 (now $155), but I don't think I have to pay anything in the $160s."
I still don't. I am a buyer in this stock at the 50-day SMA. Not above. For those interested, June 19 $155 puts are currently paying $9.25. That might not be a bad sale.
Related: Nikkei Sets Record as Tech, Consumer Plays Battle in Japan
At the time of publication, Guilfoyle was long AMD and NVDA equity.
